Connect with us

Finance

Should You Buy Or Avoid Tesla, Apple And These Other 18 Large Stocks?

Published

on

The largest stocks dominate the headlines and investors’ wallets.

So, even though I’m fond of off-the-beaten-path stocks, once a year I give my buy-or-avoid ratings on the 20 largest stocks. Today’s the day.

Apple

AAPL
($2.4 trillion market value). Buy. The company’s iPhones and Mac computers have a loyal following. Having $48 billion in cash and marketable securities helps, too.

Microsoft

MSFT
($1.8 trillion). Avoid. It’s a fine company, but the stock was way overpriced a year ago, in my opinion, and is still somewhat overpriced now.

Advertisement

Alphabet

GOOGL
($1.3 trillion). Buy. The most innovative American company, in my view. It has increased its earnings by 15% a year for the past decade.

Amazon

AMZN
($1.2 trillion). Avoid. In the past few quarters, revenue growth slowed and earnings fell. Yet the stock still sells for 101 times recent earnings.

Tesla
TSLA
($863 billion). Avoid. It’s an exciting company and Elan musk is a charismatic guy, but in my opinion the stock price (at 14 times revenue) is just too high.

Berkshire Hathaway (BRK.B, $591 billion). Buy. Under CEO Warren Buffett, Berkshire owns dozens of companies, and has $327 billion in investments. In my book, no one beats Buffett.

UnitedHealth Group

UNH
($480 billion). Neutral. ­­­I’m lukewarm. But if the widely-predicted recession is at hand, health care stocks are likely a decent place to hide.

Johnson & Johnson
JNJ
($438 billion). Buy. This health-care conglomerate is a notch cheaper than UnitedHealth, and has a better return on total capital (17% versus 10%).

Advertisement

Visa
V
($388 billion). Avoid. Visa’s earnings growth has been admirable. But it’s expensive at 14 times revenue and untimely if a recession is at hand.

Meta Platforms (META, $$377 billion). Avoid. Facebook, its flagship product, seems to be losing cachet among young people. Earnings in the June quarter were down from a year ago.

ExxonMobil (XOM, $357 billion). Buy. Exxon shares were up 45% in the past year while most stocks were down. I think the oil industry revival will continue.

Walmart
WMT
($353 billion). Avoid. I’m torn, because Walmart usually holds up well in recessions. But 25 times recent earnings is more than I want to pay.

Procter & Gamble
PG
($323 billion). Avoid. Products like detergent and razor blades are staples; people buy them even in tough times. But I think investors overpay for the presumptive steadiness.

JPMorgan Chase (JPM, $320 billion). Buy. This blue chip has fallen more than 34% in the past year. Banks have their troubles, but at nine times earnings I think it’s a bargain.

Nvidia (NVDAA, $312 billion). Avoid. The Fed’s campaign of raising interest rates is poison to high-multiple stocks, and Nvidia’s multiple is 41 times earnings.

Advertisement

Eli Lilly
LLY
($296 billion). Avoid. Lilly’s ten-year revenue growth figure is unimpressive at 3.3%, yet the stock still commands 50 times earnings.

Mastercard
MA
Inc. (MA, $284 billion). Avoid. Colleagues talked me into buying Mastercard a few years ago and we did well. But 13 tunes revenue? That’s dangerously high.

Chevron
CVX
($283 billion). Buy. After six years in the wilderness, the oil industry is making strong profits again. Also, Chevron sports a 3.8% dividend yield.

Home Depot (HD, $277 billion). Buy. I’ve had Home Depot as an “avoid” the past four years. But with the stock down to where it was eight years ago, I think it’s a value.

Bank of America
BAC
($255 billion). Buy. The Fed’s raising short-term interest rates hurt banks. Nonetheless, at 9 times earnings, I think BAC is cheap enough to be a buy.

Past Record

The past year has been tough for almost all stocks, and the 20 largest are no exception. A year ago, I slapped an “avoid” rating on 14 large stocks. They declined an average of 23.7%. The six stocks I recommended buying were down an average of “only” 17.1%.

Long-term my “buys” have beaten my “avoids” by the narrowest of margins, 11.4% to 11.2%. (The long-term figure covers 18 columns about the largest stocks written from 2001 through 2021.)

Advertisement

Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.

Disclosure: I own Alphabet, Apple and Berkshire Hathaway personally and for most of my clients. One or more clients hold Amazon.com, Chevron, ExxonMobil, Johnson & Johnson, JP Morgan Chase, Microsoft, Nvidia, Tesla and United Health.

Source: Fox Business

Follow us on Google News to get the latest Updates

Advertisement
Advertisement

Trending